Comparative Analysis Between Conventional Banking and Shariah Based Banking: A Study on Social Islami Bank Limited

Abstract

This report is on Comparative Analysis Between Conventional Banking and Shariah Based Banking: A Study on Social Islami Bank Limited and for making the comparison in fruitful manner; five other conventional banks and five other shariah based banks are taken in consideration along the main one. Basically, banks are profit oriented organization. Both types of banks have the ultimate intension of earning profit but the operational procedures are fully different. Conventional banks use the money as product. They keep deposits at lower rate and provide loan at higher rate. Here the business tool is money. In contrast, the motto of Islamic banking is profit sharing and loss bearing where Shariah based banks follows the partnership base business contract by using the certain terms which is known as Mudharabah, Wadiah, Musharakah, Murabahah, Ijar. In Islamic Banking, the issue of profit and ribah(interest) is strongly monitored as it is prohibited very strictly by Islam. Where in conventional bank we get fixed amount of interest which is also known as RIBAH, there in Islamic bank we get a certain share of banks total profit. In this report I try to show that how the Islamic banking system differ from conventional banking system by regarding the concern of Social Islami Bank. Social Islami Bank Limited (SIBL) is a banking company registered under the companies Act 1994 with its head office 15 Dilkusha C/A, Dhaka-1000. The bank operates as a scheduled bank under a banking license issued by the Bangladesh Bank. The Bank started its operation from 22, November 1995. SIBL is a capitalized new generating Bank with an authorized capital of Taka10000 Million in 2014 and paid up capital of Taka 7031.415640 million in 2014 and also 6939.9257 million respectively as of December 2013. In the formal corporate sector, this Bank would, among others, offer the most up-to date banking services through opening of various types of deposit and investment accounts, financing trade, providing letters of guarantee, opening letters of credit, collection of bills effecting domestic and international transfer, leasing of equipment and consumer durables, hire purchase and installment sale for capital goods, investment in low-cost housing and management of real estates, participatory investment in various industrial, agricultural , transport, educational and health projects and so on. In the Nonformal non-corporate sector, it would, among others, involve in cash Waqf Certificate and development and management of WAQF and MOSQUE properties and Trust funds. For coordinating my internship I have been placed in Social Islami Bank Limited, Dinajpur Branch, Dinajpur. There are 03 sections in Dinajpur Branch. They are: 1) General Banking 2) Investment Department 3) Foreign Exchange Department. Accordingly I work all of the sections. I devote my utmost effort and attention to learn banker’s functions. At completion of internship, I will render all my acquired knowledge to present the report on comparison between Islamic and conventional banking.